Date Available
7-25-2013
Year of Publication
2013
Degree Name
Doctor of Business Administration (DBA)
Document Type
Doctoral Dissertation
College
Business and Economics
Department/School/Program
Accounting
First Advisor
Dr. Dave Ziebart
Second Advisor
Dr. Hong Xie
Abstract
In this study, I use Section 404(b) of the 2002 Sarbanes-Oxley Act as an exogenous shock to examine the effect of auditors’ assessment of internal control over financial reporting (ICFR) on audit fees, cost of debt, and net value of compliance between 2002 and 2010. Using firms themselves as their own control, this study conducts firm-fixed effects analyses to explore the close causal effect of SOX 404(b) on compliance costs (proxied by audit fees), compliance benefit (proxied by cost of debt) and net compliance benefit (proxied by Tobin’s q). Through analyzing how SOX 404(b) affects firms’ compliance cost, compliance benefit, and net compliance benefit, the results suggest that SOX 404(b) decreases firms’ cost of debt, but also imposes compliance costs. Overall, SOX 404(b) increases firm value premium by around 8.63%. The study also examines whether the 2007 reforms have achieved their purpose by comparing audit fees before and after the 2007 reforms.
Recommended Citation
Jia, Hongmei, "THE EFFECT OF AUDITORS’ ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING ON AUDIT FEES, COST OF DEBT AND NET COMPLIANCE BENEFIT" (2013). Theses and Dissertations--Accountancy. 3.
https://uknowledge.uky.edu/accountancy_etds/3
